The paper analyses management of product innovation in project-based industries, offering a view on management not only of firms, but also of markets. It first argues that projects are prominent in industries where the nature of consumer demand means that product innovation takes place as experimentation. Then, the paper argues that if skills needed for projects are very diverse and projects are complex, there are few internal managerial economies of projects, and the scope for management then transcends the boundaries of firms. In these cases, markets become organized in combinations of people, contracts, and other institutions, in order to facilitate the coordination of market-based projects. While contracts play a role, a continuous, active role of knowledgeable managers (leaders and boundary spanners) is also often necessary. Such managers --- and thus (core parts of) whole industries --- are embedded in project ecologies at particular places, which is why we see geographical clusters in many project-based industries. The paper is mainly conceptual, but develops its argument by drawing examples from the Entertainment industries throughout.
Keywords: Project organization, product innovation, portfolio management of projects, entertainment industries
JEL Classification: L22, O31, L82

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This paper discusses the concept of the experience economy in a Nordic context and shows
how the Nordic version of the concept has come about from a mix of three different
approaches and theories. Besides, the Nordic definition links the experience economy closely
with cultural activities. In the Nordic countries the experience economy has been developed
in a political context and it is apparently a popular development policy for local government
authorities and regions. This paper discusses the Nordic definition of experience economy
and questions if it makes any sense. The definition of experiences is not clear, and the
definition of the word “economy” has different interpretations as well. In a narrow
interpretation the term economy is related to market economic value, which is used in the
political terminology. The paper shows that the experience economy can follow three
different routes to market value creation, and how the growth opportunities for the different
experience areas will depend on three different trends. Therefore, it can be shown that only
some experience areas are growing, and the market value creation occurs in very different
ways and to very different extents within, and in relation to, the different experience areas.
The greatest growth potential resides probably in the broad value creation in association with
the experience areas. But the experience economy does not lend itself to any consistent
definition.

Patent trolls (or sharks) are small patent holding individuals or firms who trap R&D intense manufacturers in patent infringement situations in order to receive damage awards for the illegitimate use of their technology. While of great concern to management, their existence and impact for both corporate decision makers and policy makers remains to be fully analyzed from an academic standpoint. In this paper we show why patent sharks can operate profitably, why they are of growing concern, how manufacturers can forearm themselves against them, and which issues policy makers need to address. To do so, we map international indemnification rules with strategic rationales of small patent-holding firms within a game-theoretical model. Our central finding is that the courts’ unrealistic consideration of the trade-offs faced by inadvertent infringers is a central condition for sharks to operate profitably.
Keywords: Patent, patent shark, patent troll, damage award, infringement
JEL Classifications: M00, M11, M21, K00, K11, K33

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This is not a theoretical paper but an application of existing law and economic contract theory to the issue of how to draft a specific kind of contract. It is addressed to practitioners and is intended for practical use. It will be part of a Wiki (as in Wikipedia) for contract drafting, which IACCM (International Association for Contract and Commercial Management) has initiated. The main theoretical aspect of the article concerns the application of the value maximization principle (the Coase theorem) to the drafting of confidentiality agreements. While the article is not theoretical, its prescriptions are open to theoretical dispute; this may especially be the case for the section on the size of damages.

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When a court sets standards of due care in a tort or contract case with a view to how the standards will affect future behavior of parties similar to the litigants, it should sometimes realize that only one of the two future parties is likely to become informed of the standards. The standards can then only have a direct effect on the behavior of the informed party, and it may be thought that the court should hold the informed party strictly liable, which maximizes this effect. However, this ignores that the informed party may, although strictly liable, lower her level of care in order to induce the uninformed party to take greater care. In this situation, the negligence rule may do better than strict liability, since the discontinuity of the negligence rule can prevent the informed party from strategically lowering her level of care. Under the negligence rule, optimal standards are sensitive to whether the informed party acts first and to whether she is the injurer or the victim. For both the informed and the uninformed, there are circumstances in which the standard should be higher than first best and other circumstances where it should be lower.

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In this paper the two canonical theories of the firm - transaction costs economics and the
knowledge-based view of the firm – predictions on ‘make-or-buy’ are tested on the news
industry. The news industry provides an interesting case on which to test the two theories since
it is characterized by a high degree of urgency. Urgency refers to the need to catch and process
inputs fast. A tendency that is becoming more widespread in other industries where the
production cycle tends to be reduced. The test is don on original data on the newspaper industry
collected by the author. The conclusions drawn are that that newspapers are organized differently
than is predicted from the knowledge-based view of the firm and transaction cost economics.
The newspapers do no specialize in core competencies measured in terms of topics covered. On
the contrary, a precondition for outsourcing is well-developed competencies in house. The
widespread use of integration cannot either be explained as a solution to hold up either, such as
transaction cost economics predicts. The reason behind has to be sought in urgency.

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Debate over the merits of patents versus inducement prizes has tended to ignore the signaling roles of patents, and totally ignores the impact of patent signaling on prize contests. This paper asks: How does patent signaling affect the strategic choices of firms considering entering prize contests? First, we consider contests that do not allow patenting, then contests that do. If patenting is not allowed, we argue, patent-holders, both internal and external to the contest, can adversely impact prize contests by claiming prize winner violation of their patents, and suing for damages. The likelihood of such challenges being made can deter entry, particularly in contests requiring large sunk costs. Furthermore, the firm's decisionmaking process will discriminate against entering prize contests and favor R&D projects with patentable outcomes. Together, these problems may circumscribe any future wider role for prize contests, and limit their major putative welfare advantage: the ability to place prize winning solutions into the public domain. In contests where entrants may patent their inventions, entry is subject to basically the same problems as above (although such contests may carry some advantages as regards contest design). Our overall conclusion is that prize contests are liable to fail due to the lack of potential entrants, particularly as regards entry on the part of larger commercial firms.

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How firms organize the production of user modifications in the computer games industry

Jeppesen, Lars Bo(København, 2004)

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Abstract:

Modding – the modification of existing products by consumers – is increasingly exploited by manufacturers to enhance product development and sales. In the computer games industry modding has evolved into a development model in which users act as unpaid "complementors" to manufacturers’ product platforms. This article explains how manufacturers can profit from their abilities to organize and facilitate a process of innovation by user communities and capture the value of the innovations produced in such communities. When managed strategically, two distinct, but not mutually exclusive business models appear from the production of user complements: firstly, a manufacturer can let the (free) user complements "drift" in the user communities, where they increase the value to consumers of owning the given platform and thus can be expected to generate increased platform sales, and secondly, a manufacturer can incorporate and commercialize the best complements found in the user communities.
Keywords: innovation, modding, user communities, software platform, business model.
JEL code(s): L21; L23; O31; O32